It wasn’t that long ago that a branch manager was required for every physical office on a brokerage. Then they opened it to 3 offices. And now, there is no limit. Brokers rejoice! Agent’s run wild!
New Broker Rules*
Not so fast. In the same rule that removes the limit on offices, they are some very specific new rules that define what brokers need to do to supervise these agents. Take a look at some of these highlights:
The broker must:
- Have written policies and procedures
- Oversee file storage
- Review how trust funds are handled
- Inspect advertising
- Make sure their agents know federal and state real estate laws
- Maintain timely and reasonable communication with their agents
- Be available to resolve complaints from clients
- Document training, and monitor agent compliance
Nothing earth shattering there, many brokers have been doing these things already. But now that they are spelled out, you might find that some brokers will need to tighten up their policies. Have you ever heard a broker say they haven’t heard from an agent in months? Can’t let that go on anymore.
Problems with Agents
What if an agent does screw up? Will the broker go down with them? Yes they will, unless they do all of these things:
- Show they had written instructions to prevent it
- Prove they were actively supervising the agents
- Attempt to correct or mitigate the damage
Of course, the broker will still be up a creek if they participated, or excused the behavior, or even if they tried not to find out about it. There is often legal articles telling real estate agents not to venture off the path so they don’t get themselves into danger, but a broker pretending they didn’t know, or actively trying not to find out that their agent has made a mistake, will get into worse trouble than if they had addressed the issue as soon as it happened.
In a seller’s market, many agents begin to think that they run the show. There are many strong agents that always have the best interest of their clients in mind, but all of us need a reality check once in a while, and that is what the broker is for. The broker’s duty is to provide a safe working environment where the agents can express their creative solutions for their customers, and they trust that the broker is reviewing everything to keep the agent from slipping up.
Great agents respect their brokers and recognize how valuable it is to have a trusted mentor that knows the law and the rules, and can help guide us back to path that is a win-win for our agents, their clients, the broker, and elevates our industry as a whole. Great brokers instill pride in their agents for putting their all into their work, and honoring the fiduciary duties that guide all representative behavior. Fiduciary is a badge of honor for agents and brokers that want to see everyone succeed.
So be careful out there, brokers. The good ones already had all of these new rules covered by being vigilant, keeping an eye on, and lending a helpful ear to all of their agents. Those absentee brokers? These new rules put you on notice. Time to shape up.
Dan Naylor, President
Institute of Real Estate Education
Solutions for Brokers – Safe Harbor
We have a solution for brokers that want to track what training their agents have received, and to save records of the employment agreement and policies and procedures. If your brokerage wants to offer convenient online training for your agents that uses proper record keeping to ensure the broker is protected when the agent doesn’t follow the rules, contact us, and we can setup your own personalized broker portal.
Read the Rules
*You can read the proposed rules on the website for the Utah Office of Administrative Rules. Search Real Estate, and check the box for Proposed Rules. Then click on the Commerce section. These will likely take effect in June 2021.
Other recent rule changes:
- Rules for webinar CE classes
- No more mandatory license denial for felonies
- $10,000 limit of brokerage funds in Property Management Trust account (Regular trust account limit is $1000 as of 2020)